Law on Reducing Effects of Covid-19

Law No. 7244 on Reducing the Effects of COVID-19 Pandemic on Economic and Social Life is published in the Official Gazette today. As per the Law, certain measures are introduced and amendments are made accordingly which will have effect in different sectors. The below novelties in relation to Labor Law and Turkish Commercial Code are especially noteworthy:

– Termination of employment agreements by the employer is prohibited for a period of 3 months (i.e. starting from April 17, 2020 until July 17, 2020) – except for the reasons concerning employee’s immoral and bad faith conduct. In case of non-compliance, administrative fine shall be imposed to the employer. This 3-month period can be extended up to 6 months.

– As of April 17, 2020 employers are allowed to either partially or completely send the employees on unpaid leave for a maximum period of 3 months and this shall not grant the employees the right to terminate their employment agreements on just cause. This 3-month period can be extended up to 6 months.

– Salary support shall be provided to employees (i) who are sent to unpaid leave and cannot benefit from short-term working allowance, and (ii) whose agreements are terminated after March 15, 2020 within the scope of Article 51 of Unemployment Insurance Law and who cannot benefit from unemployment allowance. Such support shall be provided limited to the period during which termination is prohibited and on condition that the relevant employees do not receive a pension pay from any social security organization. Administrative fine shall be applied to the employer in case it is determined that the employee benefiting from such support is actually working for the employer.

– Payments shall be made for short-term working allowances in accordance with the employers’ declarations and without waiting for the completion of eligibility assessments. Any excessive payments that are made due to misleading information provided by the employer shall be collected together with interest.

– In line with the previous announcement of Ministry of Trade, distribution by capital companies of (i) advance dividend, previous years’ profits and free reserves, and (ii) more than 25% of net profit for the year 2019 are prohibited until September 30, 2020. This period can be further extended or shortened.